IRBA Newsletter Issue 53

Issue 53 | January-March 2021 10 4 and R200 000 for charge 5; no cost order; and publication by the IRBA of the respondent’s name, the findings of the investigation and the sanction imposed. Matter 6 Mr Pule Joseph Mothibe, the respondent, was the joint auditor of an entity for the 2014, 2015 and 2016 financial years. The respondent failed to disclose material non-compliance with legislation and internal control deficiencies in the 2014, 2015 and 2016 audit reports of the entity. The respondent also failed to obtain sufficient appropriate audit evidence relating to these years on irregular expenditure and fruitless and wasteful expenditure. In addition to this, the respondent omitted a modification regarding a limitation of scope in the audit reports for the 2014 and 2015 financial years. The respondent failed to determine whether it was possible to perform alternative procedures to obtain sufficient appropriate audit evidence. Regarding the 2016 financial year, the respondent failed to document the nature, timing and extent of audit work performed on management’s assessment of impairment of property, plant and equipment; and also failed to maintain an attitude of professional scepticism. In addition, the respondent omitted a modification regarding the limitation of scope in the audit report, in that an assessment was not performed on useful lives and residual values of property, plant and equipment, as required by the International Accounting Standards. The respondent was sentenced to a fine of R200 000 for charge 1, R200 000 for charge 2, R200 000 for charge 3 and R200 000 for charge 4; no cost order; and publication by the IRBA of the respondent’s name, the findings of the investigation and the sanction imposed. Matter 7 Ms Thuto Margret Masasa, the respondent, was the joint auditor of an entity for the 2014, 2015 and 2016 financial years. The respondent failed to disclose material non-compliance with legislation and internal control deficiencies in the 2014, 2015 and 2016 audit reports of the entity. The respondent also failed to obtain sufficient appropriate audit evidence relating to these years on irregular expenditure and fruitless and wasteful expenditure. In addition to this, the respondent omitted a modification regarding a limitation of scope in the audit reports for the 2014 and 2015 financial years. The respondent failed to determine whether it was possible to perform alternative procedures to obtain sufficient appropriate audit evidence. Regarding the 2016 financial year, the respondent failed to document the nature, timing and extent of audit work performed on management’s assessment of impairment of property, plant and equipment; and also failed to maintain an attitude of professional scepticism. In addition, the respondent omitted a modification regarding the limitation of scope in the audit report, in that an assessment was not performed on useful lives and residual values of property, plant and equipment, as required by the International Accounting Standards. The respondent was sentenced to a fine of R200 000 for charge 1, R200 000 for charge 2, R200 000 for charge 3 and R200 000 for charge 4; no cost order; and publication by the IRBA of the respondent’s name, the findings of the investigation and the sanction imposed. Matter 8 The matter was a referral from the Inspections Committee. The respondent failed to obtain sufficient appropriate audit evidence on revenue and did not document the assessment of the risk of material misstatement at the assertion level for various classes of transactions, account balances and disclosures. Furthermore, the financial statement included a restriction paragraph indicating that the financial statements did not include certain disclosures required by the Companies Act. The respondent did not modify the audit opinion with regard to these material disclosure deficiencies. The respondent was sentenced to a fine of R40 000 for charge 1 and R100 000 for charge 2; no cost order; and publication by the IRBA in general terms. Matter 9 The respondent failed to issue shares in accordance with a court order and the company failed to prepare financial statements for four consecutive years. The respondent failed to consider and report the reportable irregularities arising from this. For the year where financial statements were issued, an inappropriate audit opinion was expressed, as the financial statements were prepared on the historical cost basis and were therefore not considered fair presentation. In addition, inaccuracies in the financial statements had not been identified by the respondent. The respondent also failed to identify and address threats as a result of a family relationship and furthermore breached Section 90(2) of the Companies Act, as the respondent prepared and audited the financial statements. The respondent also had a material business relationship with a shareholder of the company and that breached the Code of Professional Conduct. Lastly, in communication to the IRBA, the respondent misrepresented facts relating to a declaration made to the South African Revenue Service. The respondent was sentenced to a fine of R100 000 for charge 1, of which R50 000 has been suspended for three years, on condition that the respondent is not found guilty of improper conduct relating to work done during the period of suspension; R100 000 for charge 2, of which R50 000 has been suspended for three years, on condition that the respondent is not found guilty of improper conduct relating to work done during the period of suspension; R100 000 for charge 3, of which R50 000 has been suspended for three years, on condition that the respondent is not found guilty INVESTIGATIONS cont.